Is It Time To Start Investing?

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OptionsXpress ScreenshotHey everyone, thanks for joining me for my second post since I’ve been back. I’m Josh, and today we’re going to be chatting a bit about investing. More importantly, we’re going to be talking about a question that I know we’ve all asked ourselves, “Is it time to start investing?” As you know, the simple answer to the question is yes, but who wants a simple answer. Let’s delve deep into the topic.

When Is The Best Time To Start Investing?

No matter when you’re reading this, if you haven’t already started to invest, the best time to start is NOW! There are tons of reasons that you might want to invest. You may be looking to make some extra money, save money for a wedding or higher education, or even start a retirement fund. No matter what your reason for investing is, procrastinating is only going to cost you money. Have you ever thought about the main factor in profitable investments? That factor is time! If you start investing today, interest that you earn this month will start earning you interest next month. However, if you don’t get started this month, next month, you’re not going to earn money on the interest you earned this month.

That’s the idea of compounding interest. Obviously, your start amount plays a role in how much you will make over time. However, when talking about long term earnings, you’ll most likely make more money off of interest earned on interest earned on interest than you will  make from the money that you put in. The goal here is for your monthly interest earnings to reach a point where they are higher than your monthly deposit amount. So, every day that you wait, you’re loosing your chance to earn interest that can work for you later! So the final answer is, “Yes, it’s time to start investing, now is always the best time to start!”

Am I Better Off In The Stock Market Or On Peer To Peer Markets

Because of the popularity of peer to peer investing, one of the most common questions that beginners ask is, “Am I better off investing in the stock market or in peer to peer markets”. It’s my belief that this question stems more from intimidation than anything else. The truth is, there’s quite a bit going on in the stock market. There are more types of investments than most people care to get to know and more variables than anyone wants to deal with. However, the peer to peer market seems a bit easier to work in. In the peer to peer market, investors give their peers loans. The peers pay interest on the loans and the investors make money. Seems like a simple choice right?

Well, it’s not really that simple. When you invest in the stock market, your investments are protected by a series of complex laws that stop larger companies from taking advantage of you. This heavy regulation helps to insure that your investments are safe and secure. However, when you look into the peer to peer market, you’ll quickly realize that it’s the wild wild west of investments. Although there are some minor regulations, there’s not anything that really protects you in the market.

Does that mean peer to peer investing is a bad idea? Well, not necessarily. The bottom line is peer to peer investment platforms like Prosper are in it for the long haul. They know that if your investments are not safe with them, they’re not going to last very long. Therefore, they set up their own rules and regulations to keep you safe. In the case of Prosper, I would even venture to say that your money is just as safe there as it would be in the stock market.

So, the final answer to the question, “Am I better off investing in the stock market or in peer to peer markets?” is, neither. It’s really up to you and what you feel more comfortable with. As far as I’m considered, both can be safe or dangerous investments. You just have to do your research to see which option is best.

Diversification Is Key

As a beginner in the investment world, there’s one key thing you’ll need to learn, and you’ll need to learn it quickly. To protect your money, and the growth of that money, you’re best off bringing some diversity to your investments. The process of diversifying your investments is the process of splitting your money up over multiple different types of investments. Some types will be high risk, high reward. Other types will be low risk, low reward.

When it comes to diversification, you can do this a couple of different ways. You can diversify your portfolio by buying different stocks from different companies, funding several different personal loans in a peer to peer investment platform, or you can go with a mixture of both. However, for the beginner, I strongly advise diversifying within the same platform to keep things simple.

Online Investment Platforms Have Become Much More Than Just A Place To Trade

Online investment platforms have really grown in popularity since their creation, and they continue to do so. Why? Because they offer much more than a simple way to trade. These days, online investment platforms offer training for beginners, tools that help you gauge risk vs. reward, some even offer the option of virtual trading to test your strategy before actually employing it. Using a platform like OptionsXpress, you’ll not only be able to diversify your profile, you’ll be able to learn everything you need to in order to be profitable.

Key Takeaways

OK, when I started this article, I started it with the intentions of telling you that now is the best time to invest and why. However, when I get to writing, I tend to think of related topics. In today’s article, my frame of thought has turned the article into a mess. At least I’m willing to admit it. To answer the first question, now is always the best time to invest. However, as a beginning investor, you’re going to want to do a little research to figure out where to invest, what to invest in, and how to diversify your portfolio!

Reader Question

Do you invest currently? If so, when did you start and do you wish you would have started earlier?

5 COMMENTS

  1. I really only invest through my 401k, and so far I’ve been perfectly happy taking that approach. I do plan on opening up an individual investment account next year and doing a bit more investing beyond simply my retirement accounts.

  2. Absolutely agree that the best time to start investing is NOW! I started right after graduation and got my first job. Actually my dad opened an IRA account for me even before I got my first real job. I have a small amount of money in peer to peer lending but most of my investments are in the stock market/bonds. Peer to peer lending is alright but it’s a little new…and I think it’s okay to put some money in it…but I’d prefer to stick mainly with the stock/bond market and in IRA/401ks.

  3. I don’t invest in peer-to-peer lending. Nothing really against it, but I’ve taken to simplifying my investment strategy so I don’t have to pay too much time every day tracking them. So I’m more of an index fund guy who checks every day or two or three (or more sometimes). That frees up my time to do other things… like this! 🙂

  4. I do invest, but mainly in retirement accounts (within the Canadian version of the 401(k)) and TFSAs (the Canadian version of the Roth IRA).

    I think it’s always time to start investing! You just have to be smart as to where you are putting your money. I’ve been looking at starting to invest in index funds.

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